Wednesday, August 27, 2014

Mahindra and Tata Motors to appeal against CCI’s penalty on auto parts

A day after India's competition regulator joined other developed automobile markets to rein in 14 car makers for alleged unfair practices in the spare parts market, leading companies such as Mahindra & Mahindra and Tata Motors on Tuesday said they will appeal against the order. Other car makers are expected to follow. A total . 2,500 crore was imposed on them .fine of ` The Chinese competition authorities recently penalised several leading car makers for control of spares distribution. While M&M and Tata Motors announced their intent to the Bombay Stock Exchange, Honda Cars India told ET it was yet to receive any official communication from the Competition Commission of India (CCI). "Once we receive the same, we will evaluate the (CCI). "Once we receive the same, we will evaluate the order and respond accordingly," said the company spokesperson.

Hyundai Motor India had already obtained a stay or der from the Madras High Court against proceedings by CCI in the case. Considered a landmark order by some in the legal fraternity, this was the first time CCI made a ruling on a specific vertical rather than cartelisation in an industry. A service centre said the order would be a great boon to customers and this move by CCI has the l potential of giving a fillip to 3 lakh independent work shops in India, which were on the decline on account of unavailability of spare parts, which car makers deny.

Some of the car makers fear, if the ruling is implemented, it will further boost the spurious parts market. But one expert, who didn't want to be named, felt otherwise. "How do you deal with the menace of spurious spare parts? It is by making them available at the right price. Then the customer will never choose a spurious spare part. The price can be higher by 15-20% than spurious parts, but not more exorbitant than that. In fact, by not making the parts available, one is encouraging spurious parts industry to mushroom," he said. A senior executive at a leading MNC said the implications will be significant.